To grill after a number of weak key figures – The European Central Bank (EU) – Macro and politics

On Monday at 5 pm, in the European Parliament, all eyes will be on the European Central Bank President Mario Draghi, who will speak and answer questions from the elected representatives of the Member States at a hearing at the European Parliament. An hour.

"It is important that the EU is predictable," said NHH professor Gernot Peter Doppelhofer at E24.

– If the central bank abandons its current monetary policy regime, we can see that volatility is flourishing again

December 13 is the monetary policy meeting of the European Central Bank (EU).

Then, Draghi should indicate if the EU complies or not with the liquidation plan of the securities purchase program when we enter 2019.

Crisis packs in games

Recently, markets have been presented with a number of weak key figures from the euro area.

The question is therefore whether the European economy is really ready to abandon Quantitative Easing (QE).

"We see that some countries are doing well, while others are still in trouble, and if the EU seeks more information and sees greater downside risk, the plan could be re-evaluated." At a time when the central bank must not forget that its job is to ensure market stability, they can not continue with QE forever, says Doppelhofer.

Mario Draghi warns against the brake on inflation in the euro zone

Low key figures

The afternoon Draghi barbecue takes place on the first working day after EU approval of brexite agreement. The EU is therefore close to a step that has required a lot of effort and created uncertainty.

But there are still many urooms.

Last month, among other things, the weakest PMI figures for the euro area and the weakest growth in Germany over five years. Quarterly growth in the eurozone has reached half of what analysts expected – at the lowest level in four years.

"The EU notes that the growth momentum is weaker, but Mr Draghi has clearly explained that many factors are temporary," said Joachim Bernhardsen, of Nordea Markets' macroeconomic strategy.

Doubt for change of plan

An unusually high absence for illness was reported due to a flu wave earlier in the year. New test methods for measuring vehicle emissions have also had the effect of reducing contributions from the auto sector.

"This is happening at the same time as the increasing pressures on wages and costs, growth in itself is not extremely important, but rather to what extent inflation is occurring – and this is happening. seems to be the case, says Berhardsen and concludes:

"It will take a lot until December 13 to continue QE in 2019.

The macro-strategist believes that the European economy no longer needs the support of the central bank's stock purchase program, but says this may change as the slowdown this year is due to temporary factors.

– If the SMIs were to continue, this could be relevant with additional support from the EU. They are so low now that if they lie and growth does not come back, it may sound scary, he says.

Slower growth in four years: – Draghi must adapt to the decline

Italian bankruptcy bell

Italy is a key factor, where the government is trying to challenge the EU summits in Brussels with larger budget deficits than the EU considers acceptable.

– A direct consequence of the abandonment of QE is visible in the banking sector in Italy. Many of the country's banks will then make it more difficult to acquire cash, said NHH professor Doppelhofer.

Joachim Bernhardsen indicates that an alternative support program could be a package called "TLTRO III" (longer-term targeted refinancing operations), which involves long-term financing of euro area banks to stimulate an increase loans.

According to the Financial Times, it was said that this package could arrive in December.

Monday, the interest rate of Italian government bonds, after speculation about this and on the fact that Italy may be willing to reduce the budget deficit next year by 2 , 4 to 2.2% of GDP.